Briefly explain how the price of a patented drug reacts during the patent and after expiration of the patent.
What will be an ideal response?
The firm with the patent can price its product well above marginal costs. Once the drug is in production, the cost of manufacturing additional drugs is relatively constant. When the patent expires, the price of the patented good or service usually falls substantially with the entry of competing firms into the market. The price will fall toward the perfectly competitive price, and the output will increase.
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A small town in West Texas has one gas station. If the price of oil increases, the price of gas that the station charges will most likely a. increase
b. decrease. c. remains the same. d. may increase or decrease.
Refer to Scenario 7.6 below to answer the question(s) that follow. SCENARIO 7.6: Upon graduating with an accounting degree, you open your own accounting firm of which you and your assistant are the only employees. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $50,000 annually. Last year you earned a total revenue of $120,000. Rent and supplies last year were $50,000. Your assistant's salary is $30,000 annually.Refer to Scenario 7.6. Your annual operating profit is
A. -$10,000. B. $40,000. C. $70,000. D. $80,000.
A union can induce a rise in equilibrium wages in a unionized industry by
A. successfully increasing the demand for union labor. B. successfully decreasing the demand for union labor. C. reducing the marginal revenue product of labor to zero. D. reducing the marginal revenue product of firms employing union labor.
Assume that the personal computer industry is perfectly competitive. The fact that the price of personal computers over the last decade has fallen despite increases in demand signifies that the industry is a decreasing-cost industry
Indicate whether the statement is true or false